S&V Weekly Newsletter Vol.2 No.34, August 29, 2016

S&V Footwear and Leather Goods / S&V African Leather/ S&V Protect

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Jade, M1 Latex both face liquidation in Kit Group fallout

Johannesburg (SA) – The business rescue practitioner guiding Jade Corporate Clothing Concepts (Pty) Ltd is poised to have it put into liquidation, just months after Sasfin Bank sold the moveable assets of M1 Latex (Pty) Ltd, trading as The Kit Group, to Jade after it had perfected the notarial bond it held.
In a separate move, Credit Guarantee Insurance Corporation (CGIC) is to proceed with an application to have M1 Latex liquidated, because of what it describes as Sasfin’s unwillingness to negotiate a deal to pay M1 Latex’s creditors.Neil Eppel, Sasfin’s head of private equity, said Sasfin was a longstanding shareholder in M1 Latex. Last year, M1 Latex had been hit by a number of factors, notably the freeze on foreign exchange from Angola, where The Kit Group had a strong presence, and Sasfin had secured a further loan to M1 Latex with a notarial bond. There had been ongoing negotiations between M1 Latex and the Delswa Group, which includes Jade (Delswa’s marketing arm) and Jaff & Co. (Pty) Ltd (which owns Delswa’s clothing factory). The original intention was that M1 Latex would take over the Delswa Group, “but it became clear M1 Latex was in no financial position to do so. In April this year Sasfin got a court order to sell the moveable assets of M1 Latex to Jade, with the intention that Sasfin would fund the conglomerate”. Delswa, Jaff and Jade are owned by by the National Empowerment Fund (NEF), a subsidiary of the Department of Trade & Industry established to support Broad-based Black Economic Empowerment.
Because Jade itself was in a poor financial position, Jaff and Jade were put under business rescue, Eppel said.
“Unfortunately, the Kit business continued to incur losses, and Sasfin felt it couldn’t put any more into Jade. Accordingly, we understand that the business rescue practitioner intents to place Jade in liquidation.”
He said Sasfin was trying to salvage Jaff, in which case it was intended that it would acquire shares in Jaff.
Fanus van Coller, CGIC’s Manager: Salvage Mitigation Unit, said the corporation’s aim was to recover as much money as possible for all M1 Latex’s creditors. He said trade creditors covered by CGIC were owed around R13 million, and that other, unsecured trade creditors were owed about R5 million. 2 former directors of M1 Latex were owed “a couple of million each”, putting M1 Latex’s debts at R20-R25 million.
He said the main reason for CGIC’s decision to liquidate M1 Latex was “because we felt we had no other option”.
He said also that CGIC felt that M1 Latex was making no effort to repay creditors.
“We’re trying to get something going to get a reaction so that we can get something for all the creditors, not just ours. We’ve heard that some suppliers have closed their doors because they haven’t been able to recover what they were owed.”
M1 Latex founder and CEO Joe Pereira said today a group of investors were making “a last bid” to buy The Kit Group’s trading name, along with the assets. “That group doesn’t include me – I’ve been wiped out. However, we want to be able to recreate this business so that everyone wins.”
He had earlier argued to S&V that M1 Latex’s debtors’ book – which has been ceded to ABSA – would “more than cover” the company’s creditors, and that liquidating the company would slow the process of collecting the money.

ATF Trade Exhibition: The Brazilians are coming

Cape Town (SA) – Brazilian giant Calçados Beira Rio – arguably the world’s largest women’s footwear manufacturer – will be among the expected 150 exhibitors from 10 countries at the 19th International Apparel, Textile, Footwear Import Trade Exhibition (November 8-10 at the CTICC).
This will be the company’s first time on the show.
It will show its 5 core brands:

Mozambique consul plans to buy school shoes for underprivileged

Durban (SA) – The Consulate of the Republic of Mozambique in Durban is planning a gala dinner to raise funds to buy school shoes and uniforms in South Africa for underprivileged primary school children in Mozambique.
Consul Olga Essita Sambo said the dinner was intended to coincide as nearly as possible with the anniversary of the death of former Mozambique president Samora Machel, who died on October 19, 1986, in an aircraft accident. – [+27 (0)31 303 7130, mozamcon@mweb.co.za]

ABSA Agri Trends 23/08: Hides & skins prices

The average hide price over the past week was R15.29//kg green. Hide prices are determined by the average of RMAA and independent companies.
The average price for Dorper skins was R38.77/skin and Merino was R78.13/skin.